How Do I Improve My FICO Score?

Improving your FICO score can save you a lot of money over the course of time. When your score is high, your lenders will likely offer you favorable interest rates and loan terms. When your score is low, you may need to put up collateral to receive credit and your interest rates will be high. Make good financial choices when it comes to credit and you will see your FICO score improve.

Instructions

1

Discipline yourself to pay bills on time. Not only will you avoid late fees, but also your FICO score will improve. At least 35 percent of your overall FICO rating is determined by your credit history, which includes how timely you make payments.

2

Use 30 percent or less of your credit limit. Use your active credit cards regularly, even if only for small purchases, and pay the entire balance off each month. Avoid closing credit card accounts even if you do not need the extra credit line. The added available credit will improve your credit rating.

3

Maintain your credit cards for long periods to establish a good payment history with individual creditors. Your FICO score will improve if you carry a variety of credit. When you pay regularly on a mortgage, an auto loan and a college loan, for example, your credit rating will rise.

4

Order copies of your credit reports from Equifax, TransUnion and Experian (see Resources below). You are eligible to receive free credit reports once per year from each credit bureau. Initiate a dispute if you find inaccuracies on any of your credit reports (see Resources). A typical error occurs when a creditor fails to report a discharged loan on your report, or the credit bureau has your name is spelled incorrectly. You do not want to be mistaken for someone with a similar name. Correcting errors can markedly improve your FICO score.

5

Avoid foreclosure on your home, tax liens on your property and wage garnishments for such things as child support. Consider applying to execute a short sale with you mortgage lender if you cannot keep up your mortgage payments. This is when a lender agrees to take less money for a home than the amount owed on the mortgage. The impact of a short sale is less damaging to your FICO score than a foreclosure, which allows you to improve your credit score in less time.